Schemes boost house builder shares

An extension in taxpayer support for the property sector helped Britain's biggest house building firms add to share gains which have in some cases seen them double in value since the start of last year.

The four biggest listed companies have increased in market value by 81%, or £7.2 billion, over the period, which saw the Government introduce the Help to Buy scheme to kick start the sector.

Chancellor George Osborne will now extend an equity loan part of the initiative - which had been due to end in 2016 - until the end of the decade.

It will mean another £6 billion invested to help an estimated 120,000 more households purchase a new-build home.

A separate element of Help to Buy introduced last year offers lenders £12 billion of mortgage guarantees to lure them back into making high loan-to-value ratio advances of up to 95% of the value of homes.

The latest announcement saw FTSE 100 listed builder Persimmon climb nearly 7% as traders digested its implications. Its value has already surged by about £2 billion, or 88%, to £4.3 billion, since the start of 2013.

Barratt, listed on the FTSE 250 Index, rose 3% - with its market capitalisation having gone up by 105%, or £2.1 billion, since the start of last year, to nearly £4.2 billion.

Taylor Wimpey climbed 4%. Its value has risen by 84%, or £1.8 billion to £3.9 billion, over the period. Berkeley, which lifted 2%, has grown in value by £1.3 billion, or 54%, since the start of last year, to reach £3.7 billion.

House builders' shares have been steadily climbing over the past year or so, aided by improvements in the overall economy and a property market which has been buoyed by Government support.

They have stuttered in recent weeks amid question marks over the sustainability of the revival. The surge is being monitored by the Bank of England which has pledged to intervene should it threaten to overheat.

Last week, deputy governor Charlie Bean said policy makers were keeping a "beady eye" on the market, warning that a lack of supply combined with excessive growth in mortgage lending could create future financial stability risks.

The warning weighed on shares but Mr Osborne's latest intervention, as he prepares to deliver his Budget speech on Wednesday, was enough to provide a sharp boost.

Mortgage lender Halifax reported earlier this month that house prices surged at their strongest annual rate since 2007 in February after rising by 7.9% on a year ago to £179,872, though average values are still 10% below their 2007 peak.

Some fear it could mean Help to Buy backfiring, by pushing prices up beyond the means of some of those such as first-time buyers it is intended to assist.

There are concerns in particular that the second phase of the scheme - the mortgage guarantee offered on new and existing homes worth up to £600,000 - is pushing prices too high in London and the South East.

Bank of England governor Mark Carney has already said he is watching the housing market closely for signs that a bubble may be emerging and said policy makers stand ready to raise rates if needed to curb prices.

The mortgage element of the state-run Funding for Lending scheme offering banks cheap access to finance in order to lend to home buyers was already ended at the beginning of the year to help rein in the burgeoning market.

But despite the worries over the effects of Help to Buy, there are some signs that the housing market bounce-back may be stabilising.

The Royal Institution of Chartered Surveyors (Rics) recently reported that the surge in demand from potential buyers was starting to show signs of "exhausting".